Proposals made for German renewable tender volumes

Author: Laura Raus

2015/11/27

The German economic affairs ministry has published updated proposals about the country’s future renewable energy subsidy system.

The new system will shift the majority of Germany’s renewable energy subsidies from feed-in tariffs and market price-based premiums to tenders, where new plants compete for financial support.

Experts have said Germany is likely to miss its renewable energy targets with the tender designs the ministry proposed in the summer (see EDEM 17 September 2015).

In updated proposals, the ministry outlined on Wednesday how future tender volumes will be determined to achieve the renewable energy targets the state has set – to increase solar and onshore wind capacity each 2.4-2.6GW annually, have 6.5GW of offshore wind capacity by 2020 and 15GW by 2030 and to meet 40-45% of Germany’s power consumption with renewables in 2025. The ministry added a consultation on the proposals is likely to appear in January.

Volumes

Solar power tender volume will be 500MW annually, the ministry said. Most of Germany’s solar expansion is expected to come from plants below 1MW, which are excluded from tenders.

Almost all wind expansion is expected to be financed via tenders as wind plants below 1MW are rare. Tendered onshore wind volume will be adjusted based on how Germany is progressing towards the 2025 renewables target, but cannot be less than 2GW. The ministry expects annual onshore wind tender volume to be initially 2.9GW. This should ensure that the annual expansion target of 2.4-2.6GW is met even if some awarded projects are delayed.

Tenders will be based on a pay-as-bid system whereby successful projects get the award that they had requested. There will be maximum bid price. The ministry had proposed it would be €89/MWh for onshore wind, dropping 1% annually.

Biomass

In the summer, the ministry was unsure whether new and existing biomass plants should be included in the tender system. “There will be no tenders, but there would be a possibility to include them if necessary,” a spokeswoman for the ministry said on Friday. The law could give a possibility for the government to introduce biomass tenders in the future without going through parliamentary procedures again, the ministry has proposed.

The ministry expects the new renewable energy law to come into force in autumn 2016.

Transition

For solar power, pilot tenders were launched and they are already the only subsidy mechanism for ground-mounted PV systems. Onshore wind parks that receive environmental permits by 2017 and come online by 2019 are excluded from tenders, according to the ministry’s proposals. The first tender deadline for onshore wind is set for 1 May 2017.

Offshore wind parks that secure grid connection by 2017 and come online by 2021 are also excluded. After a transition period, tenders will be held from 2024 based on a centralised model whereby state pre-develops subsidised projects.

Subsidies for renewable plants that are excluded from tenders would remain based on the renewable energy law changes Germany made in 2014. laura.raus@icis.com